14 Democratic senators urge President Biden to waive interest rates that have been zero percent for most of the Coronavirus pandemic.
This comes as millions of federal student loan borrowers are set to begin repaying their student loans within two months.
Borrowers might be able to save millions if the move proceeds accordingly, even as repayments commence.
A pause on student loan repayment was announced by the Biden administration in August.
However, it will now run until January 31, 2022. This is because people continued to struggle with the pandemic.
Since March 2020, when COVID-19 triggered an economic crisis in the U.S., student loan repayment had been suspended.
Interest will begin to accrue when loan repayment begins. Still, the group of 14 legislators wants the interest waived until the Coronavirus pandemic is over.
“Accumulating student loan interest can be a daunting challenge for borrowers with the lowest incomes or the heaviest student debt burdens,” the senators stated via a letter Monday to Mr. Biden.
The group noted that the debt has also disproportionately impacted Black, Latino and Native communities.
“Continuing to waive student loan interest will provide borrowers with vital financial support during a time when students, borrowers, and higher education institutions are still recovering from economic and academic disruptions caused by the pandemic, including rising costs,” Senator Raphael Warnock of Georgia, who led the group said in the letter.
The group of senators noted that Black, Latino and Native communities have also been disproportionately affected by debt.
“Continuing to waive student loan interest will provide borrowers with vital financial support during a time when students, borrowers, and higher education institutions are still recovering from economic and academic disruptions caused by the pandemic, including rising costs,” the senators wrote in their letter.
According to calculations, waiving the interest on student loans saves borrowers about $5 billion a month, according to the Education Department.
The total amount since the pandemic began has reached more than $100 billion. As a result, lawmakers suggest that borrowers could use the extra money saved to purchase food and housing.
The senators are also urging the Biden administration to automatically rehabilitate failed borrowers with federal student loans who had previously defaulted.
Defaulting borrowers may see steps such as collecting calls from collection agencies, negative reports to credit agencies, and garnishments of some wages and benefits resume once the payment pause ends.
According to the lawmakers, by rehabilitating these loans, “the Administration can change the lives of millions of borrowers with the stroke of a pen.”
In a letter sent last week, Democratic senators called on some student loan servicers to help.
Upon receiving the letter, the senators inquired about the steps they were taking to prepare and communicate with borrowers for the return of loan payments.
It is expected that the suspension of payments through January of next year will be the “final” extension under the Biden administration for now.
To date, there has been no update from the White House.
Legislators asked that interest payments be waived “as soon as possible” in their letter to the president.